SCHOOL REFORM? Since Proposal A (1994), Michigan's Educational Focus Wavers

Legislators' Use of School Aid Fund for Colleges, Road Repairs Questioned

December 8, 2014
By: Dave Rogers

A pair of New York scholars have examined Michigan's now 20 year old educational reforms and found startling unintended consequences that pose new challenges to policymakers.

The effects of Proposal A were intended to equalize spending between rich and poor school districts. But in fact the opposite has happened -- there is more inequality than ever.

And, according to the Michigan Association of School Boards (MASB), state legislators have shifted priorities that defund K-12 education. A recent MASB policy statement:

"Voters in 1994 very clearly believed the changes in tax structure that were a part of Proposal A were meant to reduce the local burden of property taxes while creating a state funding system for our local schools. Legislators have since decided that funding higher education and community colleges from those funds was also acceptable.

"It's time to look at how we fund our schools and the costs associated with operating quality school programs, and ensure a funding system for PreK-12 that will last for the next two decades and prevent future legislative attempts at diverting the funds to others places not approved by the voters."

Now, an even worse outcome for K-12 schools is being pushed in the State House by Speaker Jase Bolger -- taking school aid money to fund road repairs. A study by economist Mitch Bean shows this plan, if approved, would cut aid by $415 per student, a devastating blow to local school districts and local governments, adversely impacting taxpayers.

Gov. Rick Snyder stated the plan "would create major consequences for schools and local governments."

Wrote Jonathon Oosting of mlive.com: "The House plan would generate money for roads without forcing motorists to pay much more at the pump, but it would reduce sales tax collections that would otherwise go to schools and local governments.

"I don't want to see negative things happen to them," Snyder said. "This is about fixing our roads. This isn't about taking something away from someone else."

The 'local property tax revolt' of the late 1970s and early 1980s-resulted in limitations associated with larger student teacher ratios, lower starting salaries for teachers, and lower student performance.

Loss of discretion brought about by the Michigan school finance reform seemed to have acted as a disincentive for its school districts, according to the report authors, who wrote:

"This is reflected in across the board trend declines in teachers per pupil, growth rates of instructional expenditure and pupil support expenditure per pupil as well as their shares, even though the lower spending groups enjoyed sharp increases in the growth rate of spending per pupil.

"In 1994, just before the program, Michigan's property tax burden was the seventh highest in the country, and Michigan was fourth among U.S. states in the share of school spending financed locally," wrote Rajashiri Chakrabarti, of the Federal Reserve Bank of New York, and Joydeep Roy, Columbia University and Independent Budget Office.

Michigan voters in March 1994 overwhelmingly approved Proposal A, reducing reliance of school revenues on property taxes by increasing the sales tax from 4 to 6 percent. This change led to a more than doubling of the state share of K-12 spending, and state aid was used to equalize per pupil spending across districts.

However, the scholars concluded: "We find that the reform generally led to a negative effect on the growth of instructional expenditure and its share, as well as in teachers per pupil. But these declines were sharpest in the high spending districts.

"As is often argued, demand for (and affordability of) a good education increases with parental income and educational attainment. So families with similar demands for education congregate, a pattern that leads to economic and demographic segregation across school districts within a state."